A distribution agreement defines the terms and conditions that a distributor is allowed to promote and sell products or services provided by a company or a supplier. The agreement is often for a limited period and can be restricted to a distribution channel or territory.
Types of Distributor Agreement
Knowing the various types of distributor agreements will also help you to choose the right sample agreement between manufacturer and distributors. Here are the options of agreements that you can explore.
- Exclusive Distributor Agreement
In this type of agreement, the manufacturer goes into a contract with the distributor to appoint only him/her to distribute the company’s products within an agreed geographical territory.
This means that no other distributor can be licensed to sell the same products to consumers in the location. Suffice to mention that an exclusive distribution agreement template is often used for expensive products.
- Wholesale Distributor Agreement
This type of distributor agreement template covers a contract that equips a distributor with the right to sell a manufacturer’s products in bulk, usually at a cheaper price than it is sold in retail. It is important to highlight who the wholesale distributor sells to, to avoid stifling the other distribution channels.
- Developer Distributor Agreement
This type of agreement entails software creation and the intellectual property associated with the creation. The agreement is often between the developer and the distributor company where the developer licenses the distributor to sell its software to the final consumers.
Who Needs a Distributor Agreement?
Any business organization or manufacturer that desires to distribute its products or services to consumers through a distribution channel needs a distributor agreement. If you plan to sell your products directly to the final consumers, you do not need to get a sample distributor agreement.
However, if you would use distributors to sell your products; exclusively or non-exclusively, you need a distributor agreement. Such an agreement is usually all-inclusive. It covers the rights of the manufacturer and the distributor as well as their responsibilities, and the terms of engagement.
The agreement must cover the details of the terms and conditions of the distributorship agreement. To ensure that your interest is well protected in the distributor agreement, it is recommended that you share the document with a legal practitioner. This will ensure that you get the necessary legal advice and recommendations before appending your signature.
You should know that when both parties append their signature on the sample distribution agreement, it ceases to be a sample agreement. It becomes a legal document that can be presented in a court of law. Any disputes between the parties involved in the contract would only be resolved legally.
Checklist of Distribution Agreement
A distribution agreement should contain specific information to make it a legally binding document. You can find sample distributor agreements online. However, before you use the document, there are some important details that it must contain. Here is the checklist of what your distributor agreement should contain.
- The full names of the parties involved and the introduction to the agreement stating the purpose of the agreement – to resell the products of the supplier.
- Describe the territory covered in the distribution agreement where the distributor can sell the supplier’s products
- State the types of an agreement it is, whether it is an exclusive agreement or a non-exclusive agreement
- Specify the products and the terms of sales
- Specify how the distributor earns – commission-based or any other payment arrangement
- Explain the terms of the relationship between both parties – is the distributor an independent contractor or the supplier’s employee?
- Highlight the timeframe of order delivery to the distributor
- Indicate what happens if the distributor cannot sell the assigned quota for the agreed timeframe
- Highlight that the distributor agreement is legally binding and enforceable by the state’s law
- Indicate the timeframe of the agreement and whether or not it is renewable
How Do I Write a Distribution Agreement?
A distribution agreement contains legal terms that a non-legal person may find difficult to develop. This means that except you are a legal practitioner, you may not be able to write a distribution agreement by yourself. Well, you do not have to fret about this because you can always use a distribution agreement template.
There are many options of templates and samples that you can find online. The best part is that these documents are free and editable. This means that you can download an editable format of a distribution agreement sample from an online platform like CocoDoc. You can proceed to edit the document to fit your needs.
When you are done with the editing, you can share the documents online with the distributor and have them sign electronically. With this, you save time and cost of printing. What does this mean?
You can use a distributor agreement template to create your distribution agreement without writing one from the scratch. When choosing a platform to get your template from, we recommend a reputable platform that has vetted documents to share.
Conclusion
Distributor agreements come in different types and forms. Each has specific key parts that should be understood by the parties involved in the contract. To avoid any disagreement between the parties along the way, it is recommended that the document is properly created and studied by both parties.
If there are any doubts, they should be resolved from the onset. Even if you are using a free sample distribution agreement, it is still recommended that you share it with your attorney for legal advice. Remember; when both parties append their signature, the agreement becomes binding.
